Project Management Institute

Leading innovations and the impact of social tools

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Managing Director, Pilot Project International Inc.

Abstract

Imagine for a minute putting your future fate and success in the hands of a total stranger. What about your success in the hands of a group of strangers who you don't know—in fact, they don't even know each other or what their specific capabilities and strengths are? Although some may guess this sounds similar to being on trial, these situations describe what is happening on the Internet right now with crowdsourcing.

It is well known the Internet has played a critical role in increasing the pace of technological change and speed of business innovation. This is augmented by the availability of certain social tools and processes such as crowdsourcing, which has fundamentally changed the way people and businesses collaborate and develop innovation.

So how should the common professional project manager conduct and manage their activities, as well as interact with these tools in this era? This paper defines and outlines a number of points, both positive and negative, to provide a basic position and understanding, ultimately allowing project managers to formulate their own solutions and realize and maximize their potential. To achieve this, the paper is divided into several parts:

Part One – Defines a basic understanding and benefits of these social tools and how they apply to project management.

Part Two – Outlines a number of issues to consider, unique to the application of these tools in a traditional project environment.

Part Three – Provides a project manager with a checklist of basic management activities and framework to consider when dealing with these tools and innovation and project solutions.

Part Four – Provides additional crowdsource recommendations and conclusions.

Part Five – Outlines how to communicate the value and understanding of social tools/crowdsourcing.

These aspects are outlined from a management perspective with application of innovation to the project management discipline.

Part One – The Basics and Benefits of Social Tool Innovation Development in the PM Environment

Business strategists agree organizations must innovate, not only to maximize efficiency and profitability models but also to survive.

As a result, businesses establish innovation projects with the intent to deliver this mandate. As mentioned earlier, the development of innovations is occurring very quickly, which for the project manager translates into pressures to find tools that support this mandate and, as much as possible, successfully.

In traditional innovation development and pilot project models, project managers rely on highly trained and qualified staff, and in many cases industry experts, who were recognized as experts in delivering innovation projects (Zbrodoff, 2010). Further, these participants are critical thinkers, who are able to correctly develop and tailor the innovation to make it most applicable to the organization.

Recently however, some Internet social tools have evolved to provide the opportunity for businesses and organizations to rethink these processes and offer a group as an alternative. The theory is innovations and ideas can be more thoroughly developed from a large collective of views, ideas, or with group collaboration. Put more simply, the philosophy is the knowledge and skill of a group outperforms a single expert. This is otherwise referred to as “crowdsourcing.”

Along the same lines and taking this concept further, online tools have also been developed to publish thoughts, options, and variables, ultimately requesting feedback, opinions, and judgments. This is otherwise known as “crowdvoting.”

Also drawing from further crowdsourcing benefits, organizations and groups also developed models that are able to harness additional financial benefits and the collective group power. In this case, individuals or groups contribute a large or small financial amount to the effort. This is otherwise known as “crowdfunding” (also called crowd financing or crowd equity, amongst similar terms).

Finally, another offshoot of the crowdsourcing model is the use of the crowd to obtain a highly mobile workforce. Here, workers involved and interested with the concept become online and temporary workers, working on specific concept elements (programming, reviewers, data entry). This is otherwise known as “crowdworking” or a “clickworker.”

Basic Crowdsource Innovation Models

Organizations and individuals have produced many crowdsourcing models and structures. When specifically seeking innovation, there are a number of models that fundamentally perform better than other (less targeted crowdsource) models. Recommended models are described as follows:

Creation based: A creation-based model allows the creation and generation of new ideas and insights. These models capture multiple innovation options and solutions for analysis.

Cooperative based: A cooperative model allows teams or groups to cooperatively work and co-generate solutions and innovations, simply by taking basic existing ideas, innovations, or concepts and adding substance to it.

Contest based: A contest model allows groups to compete against each other to produce competing concepts, ideas, and innovations. In this case, a reward can be given to a particular concept that produces the best results.

Constraint Benefits

Applying the power of crowdsourcing to an innovation project and project management effort requires the project manager to closely inspect and evaluate project processes. Exhibit 1 graphically outlays the typical project management constraints commonly defined and understood by the project management discipline.

Looking at these constraints, there are several opportunities and threats, plus a review process must be performed. The opportunities will be described as follows with threats outlined in part two.

Crowdsourcing can have a positive impact on quality. Crowd input, knowledge, and intelligence provide key quality indicators and when incorporated, enhance quality aspects. Also, more quality elements can be met by encompassing crowdvoting; whereas, particular preferences are chosen from many options.

From a time perspective, crowdsourcing allows quicker responses to building innovation. Given crowdsourcing exercises are online and electronic, innovation project concepts can be created and manipulated rather quickly. Crowd teams can be formed and innovation concepts can be posted rather immediately for review, feedback, and effort. Further, electronic voting has the ability to perform data and error checking to increase data accuracy.

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Exhibit 1 - Typical project management constraints.

There are several crowdsourcing features to consider from a budget and financial perspective. First, one of the greatest appeals of crowdsourcing is how flexible the financial structures are. Organizations can choose from a number of structures, including those where innovation project funding is borne solely by the organization by crowdsource participants (i.e. crowdfunding), or any combination of these.

The second budget benefit comes from the cost and relative economics of the resources. Looking from a historical perspective, there is typically a high cost of obtaining and keeping experts engaged who are incurred at a premium price. Comparing this to a crowdsourcing model where participants become engaged specifically because they are interested in the solution to the problem, or it is a cause in which they have a passion or interest (environmental, technological, innovation). Because of this, many participants only seek simple recognition to improve their reputation or simply participate for self-satisfaction purposes.

Further budget benefits come from drawing from the crowdfunding model, whereas individuals contribute small amounts of money because they believe in the cause. In return, they expect to share in the success of the project. This contribution can be akin to where contributors become shareholders.

From a scope perspective, crowdsourcing's intelligence can help define the scope elements and what is of particular significance to the crowd. Ranking, surveying, choosing between options, and obtaining preferences are exercises that are all able to help define the scope necessary to deliver an innovation. In other words, by using information obtained by the group, the innovation opportunity can be defined and explored without internal limitations. In particular, information obtained from potential crowdsource beneficiaries' means requirements can reflect needs of users earlier in the process, potentially saving scope changes.

Innovation project risks in an innovation project are typically high. Again, referencing the power of group intelligence, the ability to identify a number of risks is also a benefit, whereas a more thorough analysis and approach can be taken. Taking this further, risk exercises can even determine risk mitigation solutions and strategies achieved by brainstorming exercises.

Resources are by far one of the main strengths of crowdsourcing in terms of developing an innovation project. Earlier, the term crowdworking was mentioned. This “crowdworker” provides a tremendous opportunity for the project manager by providing resources interested and motivated by the topic or helping with the innovation activity. For example, if the innovation potentially improves environmental circumstances and this effort requires a large amount of data input, this work can be disbursed amongst a number of crowdworkers who are interested in the environment to complete this activity.

Additionally, scarce talent can limit growth and internal innovation development. The crowdsourcing model allows greater productivity and opens up additional lines of available expertise. Also because the group can be distributed globally, different group members are able to work on or respond to efforts 24 hours per day.

An additional resource issue to consider is how crowdsourcing goes beyond conventional outsourcing models and increases the supply of individuals. In this case the project resource bottlenecks (i.e. reliance on individuals or small groups) are removed (Project Management Institute, 2009).

Essentially the online community is large and the access to and availability of knowledge is virtually unlimited. With that, organizations have access to this resource pool unbound by organizational limitations. For example, if the innovation project requires input from global, cross expert expertise or a random sampling of individuals from many countries, the crowdsourcing opportunity is most beneficial.

In the end, businesses want to better their competitive advantages by increasing connections with their customers, faster innovation, greater efficiency, and responsiveness. Crowdsourcing has this potential.

Part Two – Innovation Project Crowdsourcing – The Issues

On the flipside of potential crowdsourcing benefits there are a number of issues. When dealing with the development of innovation, the project manager should openly identify, divulge and debate these in terms of their project applicability and impact.

There are several overarching reasons why organizations hold a tight grip on their innovation, idea, or concept and do not accept crowdsourcing as part of their project activity. By far the largest issue from a general perspective is the innovation idea or development will fall into the hands of competitors and/or groups that could do harm to the organization (insider information, stock manipulation, etc.). Simply pushing issues out to a group of strangers seems risky and unnatural, particularly those organizations built on internal innovation. Further, how can a company innovate with a crowd but still claim the development of this as their own? (Boudreau & Lakhani, 2013). These are uncertainties that must be overcome.

Constraint Issues

Looking at each of the project constraints outlined in part one, project managers must also recognize certain negative characteristics of crowdsource opportunities. These elements potentially negate the use of crowdsourcing models within the innovation project.

Starting with quality, there may or may not be guarantees that the group has a specific understanding of key quality issues as it pertains to the organization. For example, if there are specific quality assurance principles or standards that have to be adhered to, these elements would not necessarily be present in a solution. It will be up to a professional team to review, understand, and modify them, possibly negating the benefits of sending it out to a crowd. There are also a potential number of quality points raised, which may be difficult to prioritize or sequence, particularly given the fact it may be difficult to obtain further clarification or dialog. Here the large number of group members becomes unmanageable with too much information to come to clear conclusions.

Also from a time perspective, crowdsourcing groups will not necessarily recognize deadlines or time intervals. Because there may be time sensitivities for competitive or business cycle purposes, the project manager may be stuck with incomplete tasks or elements. In short, the crowdsource group may not recognize project activities or deadlines or become disengaged or disinterested.

Particular budget issues also exist. As outlined in the advantages, certain crowdfunding models allow participants to financially participate in developing an innovation solution and how this is akin to being a shareholder. Although this may be considered an advantage, it can be considered an issue as well. In particular, there may be issues in tracking contributions, banking the proceeds, dealing with monetary issues (i.e. global exchange risk) and most importantly, developing an equal or fair distribution of the proceeds or reward if the innovation is successful.

Next, the mere fact individuals are not necessarily compensated (or compensated as regular resources) for their activities may cause an issue. In this case, the low compensation means they are not necessarily obligated to participate in the innovation development project and many may not be motivated (or may simply lose interest) to complete the task. For the project manager, a resource at a free or low cost adds additional risk.

For scope, the particular number of contributions may be a concern. For example, issues such as “group think” occurs when mid to late responders provide an opinion or cast a vote based on earlier and existing submissions without consideration for additional modification or submissions. This is detrimental to the innovation activity in that all options are not necessarily disclosed or brought forward and incorporated into the solution.

Finally the crowdsource group may perceive scope and issues differently than a for-profit organization. Or in other words, maybe the innovation solution is correct from a global sense, however too daunting, uneconomical, or unrealistic to be pursued by a single organization.

The power of the crowdsource group and its ability to identify a large number of risks was identified earlier. Although a sheer number of risks identified are positive, the applicability, priority, and contingency of each risk must be performed. For example, what the specific risks involved for a company are to pursue an innovation project, or what is on going cannot be performed by an external group. In this case, an internal team must take over.

In part one, resources were identified as a considerable strength, but resources can also be considered a weakness as well. Most significantly, in a crowdsource situation there is little control over who is involved from a group perspective and little control over who specifically is available or participating from a group perspective. For example, for innovation respondents: What is their demographic makeup, or the ratio of experts and non-experts in the field? How can individuals be limited from specific groups?

Additionally, the background of individuals may or may not be contributing or acting in the best interests of the organization seeking information. For example, what about participation or innovation information that is potentially passed to competitors?

The relative control over resources is another issue. Over time, what can be done if motivation becomes an issue as the project continues or if crowdsource dynamics change or participants move to other or more innovative and “interesting” trends or topics?

There are some additional considerations. Although some crowdworkers may not be troubled, particular crowdworkers may be concerned if they discover they are, or are perceived as, free labour. Take for example the following quote: “… crowdsourcing projects rely on volunteers, and people are much less willing to volunteer if they feel someone else is profiting from their hard work” (The Economist, 2008). In this case some groups may stop contributing or intentionally jeopardize the process if they feel they are being taken advantage of.

Solution Considerations

There are also a number of issues related to the crowdsource innovation project solution.

The first consideration is the concern for the solution as it applies to the specific organization. If the innovation solution requires particular organizational knowledge and understanding, this is very difficult if the teams are made up of external individuals and organizational information has not been applied. In this case the generic solution may not provide an appropriate solution.

The second issue relates to the source of specific contributions. For example, because of the nature of the Internet, what if crowdsource participants contribute information found from other copyrighted or trademarked sources, and either purposely or inadvertently infringe on intellectual property sources? This would cause concern for the organization where the desire is to have an innovation concept developed as original works.

A further question to this point is what happens in the event a mistake is made and things go incorrectly. There may be little recourse other than the internal team who adopted or incorporated the specific solution on the innovation.

Part Three – A Basic Framework and Activities for Project Managers

Using project crowdsourcing for innovation requires consideration of a number of processes and a close consideration of the business situation. Getting started and given the relative strengths and weaknesses of the tool, it is recommended a review process be developed and considered for both the organization AND the innovation project.

A project manager, when evaluating a crowdsourcing opportunity, should include some key management activities in their analysis.

Management Activity: Analyse business conditions, the need for innovation and need to protect it

Detail:

Understanding business conditions starts the process of understanding the appeal of crowdsourcing and how applicable it is to the opportunity. Crowdsourcing will have a higher appeal when it has:

- A less competitive environment;

- An innovation which is harder to replicate;

- An innovation with components which can be broken up;

- An innovation that is less essential to business survival.

 

Management Activity: Engineer the innovation

Detail:

Engineering the innovation involves the break out or subdivision of the project into packets. This may involve the separation of proprietary and confidential innovation from global information. This exercise decreases concerns surrounding disclosures of information as the project gets defined.

Note: To use a crowdsource model, several companies break out simple tasks and voting elements to harness the power of a large group (who have difficulties formalizing into a more complex structure).

 

Management Activity: Understand the crowdsource group and its composition

Detail:

Understanding the group composition and some details around the makeup of this group is critical and there are several reasons for this. Primarily, the purpose of this is to allow the project manager to understand points of view expressed and the validity of material and data.

For example, if a small majority or number within the group is performing responses and contributing to the effort, the data produced may not necessarily reflect the true group value.

 

Management Activity: Check company and project agility — ability to use and adapt information

Detail:

A highly agile, forward thinking, and adaptable organization will be able to use crowdsourcing and its results much more effectively by being able to adopt and use material produced.

 

Management Activity: Analyse typical project management constraints

Detail:

Analysis of all crowd contributions is important for the project manager to understand all elements and project strengths and perform a thorough and more complete review of elements.

 

Management Activity: Check the quality of innovation submissions for errors, omissions, and results

Detail:

Leading innovation projects can be complex and difficult; however, checking for errors, omissions, and results is key to validating what has been performed and can be applied. Of particular significance is intellectual property infringement. Researching and investigating several government and registration sources will be necessary under these circumstances.

 

Management Activity: Make the crowdsource innovation environment credible and conducive to favourable sound data collection practices

Detail:

Projects and platforms will always have details available to attract the right individuals and keep data quality to a high standard. Additionally, due to the nature of the crowdsource environment, clarity of messages, tasks, and activities are critical to the process.

 

Management Activity: Check communication plans

Detail:

Communications for a crowdsource project must be enhanced and require additional efforts and techniques. This includes an ability to use additional social tools and real time communication tools.

 

Management Activity: Crowdsource model consideration

Detail:

For support innovation development, there are a number of crowdsource models available to choose from, including collective intelligence, crowd contests, crowdvoting, and crowdfunding. It is important to note additional models can be developed as a hybrid in whole or in part.

Note: All models developed are based on a web activity and move beyond simple brainstorming or idea generation.

Part Four – Additional Crowdsource Recommendations and Conclusions

It is obvious the crowdsourcing opportunity is very large and offers a variety of options. For the innovation project manager the potential gains and benefits are large but so are the risks and drawbacks. The project manager must be prepared to perform some diligence to determine if and how crowdsourcing is viable, needed, and necessary for developing innovation. In fact, several books and articles have been created on crowdsourcing and online models continue to evolve and develop. Companies both large and small appear to have used crowdsourcing tools to achieve particular desired results.

Looking at some well-known market successes, there are several models that have incorporated the power of a group (crowdsource) and the generation of outputs. For example:

- Wikipedia: This model has developed a database of contributors, which define and maintain particular definitions and topics of expertise.

- Open Source Software development: Related to the Open Source Initiative, this software is openly developed by individuals in a free manner by many programmers dedicating time and expertise to software products.

- Photography websites (e.g. image sharing websites)

Looking at crowdsource models and the opportunity to innovate, there are a number of theories pointing to how crowdsourcing can achieve success. Several conclusions for the project manager to consider are:

- If there is a desire to obtain a wide and diverse innovation solution, this can be achieved through crowdsourcing

- If there are large “bloated” tasks that can be sent out which do not require a lot of supervision or direct control, this task may be an ideal candidate for crowdsourcing (Project Management Institute, 2009).

- Crowd composition (or the makeup of the group) is a key element to be understood.

- “Low risk” innovations are strong candidates for crowdsourcing.

  • Low risk is defined as those innovations that a company does not rely on for its competitive advantage or it does not cause concern if they fall into competitors' hands.

- Developments that require a mass collection of intelligence, general interaction, creation, and transforming of ideas, communication, and socialization are ideal models.

- Crowdsource contests and prizes are recommended to reward large groups where innovation must be developed between teams.

- A number of new businesses and websites effectively use crowdsourcing such as Innocentive.com, Topcoder.com, Kickstarter.com.

Part Five – Communicating and Developing an Understanding of Social Tools/Crowdsourcing.

The topic of how social tools and crowdsourcing impacts innovation and development in project management can be fun and interactive. In particular, social tools and crowdsourcing use regular interactions and also engage the audience in interesting activities.

For example, an effective approach to demonstrate the power of crowdsourcing is to use game show methods. This is achieved by asking a volunteer to pit their knowledge against a small team (or the group of attendees pending the audience size), simply by asking a number of knowledge-based questions. In the case of project managers attending, this can be on A Guide to the Project Management Body of Knowledge (PMBOK® Guide).

The game show exercises can be performed either by using basic tracking mechanisms such as paper and markers or also by using advanced and sophisticated electronic poling tools.

In the end, the crowd is expected to perform better than the individual by producing a greater quantity of results with higher quality. These games will demonstrate the crowd's collective knowledge and performance is superior to that of the individual, enforcing the message.

A few additional case study interactions can also be used. To do this, a number of specific case studies can be sourced and referenced to outline similar circumstances outlining specific results and successes. The objective is to provide evidence that many crowdsourcing avenues and options are now available to project professionals.

Boudreau, K. & Lakhani, K. (April 2013). Using the crowd as an innovation partner. Harvard Business Review

Project Management Institute. (June 2009). The in crowd. PM Network, 23(6), 18-19.

The Economist. (September 2008). Following the crowd. Technology Quarterly.

Zbrodoff, S. (2010). Pilot projects, making innovations and new concepts fly. Calgary, AB, Canada: Pilot Project International Inc., 14.

This material has been reproduced with the permission of the copyright owner. Unauthorized reproduction of this material is strictly prohibited. For permission to reproduce this material, please contact PMI or any listed author.

© 2014, Shane Zbrodoff
Originally published as a part of the 2014 PMI Global Congress Proceedings – Dubai, UAE

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